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November 10, 2014

SEC’s White to Provide ‘Clarity’ on Her Fiduciary Stance

White says at SIFMA annual conference she will clarify her position on fiduciary rulemaking in the ‘short term’

SEC Chairwoman Mary Jo White with President Barack Obama. (Photo: AP)

Where does Securities and Exchange Commission Chairwoman Mary Jo White stand on a uniform fiduciary rule? No one knows, but that may soon change.

White said Monday that she would provide more “clarity” as to her position regarding a uniform fiduciary rule in the “short term,” despite the fact that the agency has not yet decided “whether to do something or what to do” regarding such a rulemaking.

Deciding whether to press ahead on a uniform fiduciary rule is “something I think is enormously important to do,” White said during a question-and-answer session with CNBC reporter Mary Thompson at the Securities Industry and Financial Markets Association’s annual conference in New York.

White declined to clarify to reporters on the sidelines of the SIFMA event how soon her opinions on a fiduciary rule would come, stating only that deciding whether to use the authority given to the SEC by the Dodd-Frank Act to put brokers under a fiduciary mandate is “an issue that I’ve been focused on since I arrived, and certainly in this last fiscal year.”

When asked by Thompson why the agency has delayed making a decision regarding a fiduciary rule, White responded: there are “very diverse views” at the commission regarding such a rule. The “inquiry as to what to do” regarding such a rule “doesn’t end with saying, ‘Let’s have a uniform fiduciary duty,’” as there are “a lot of different things that can mean.”

Added White: “Care needs to be taken to ensure we’re not harming investors by driving away service providers in the brokerage space.”

While White said that she’s “very committed” to a fiduciary rule and that it’s a “very high priority,” it’s a “quite complex issue,” particularly “in some people’s minds [as it pertains to] the ‘whether’ question, but certainly the ‘how-to’ question.”

White had said earlier this year that the agency would make a “threshold decision” by year end on whether to move forward with a fiduciary rulemaking.

Indeed, while fiduciary advocates have urged White to move forward on a fiduciary rulemaking with a split 3-2 vote, as both Republican commissioners — Daniel Gallagher and Michael Piwowar — have indicated their opposition to a fiduciary rulemaking, a split vote may not be needed, as Piwowar has recently appeared to change his tune.

Noting the “endurance and passion of arguments on all sides” of the fiduciary debate, Piwowar noted in a Sept. 30 speech that answering the question of how to move forward on a fiduciary rulemaking “is not just really hard to answer. It is really, really, really hard — with three ‘reallys’.”

Added Piwowar: “I want to be clear that I have not yet reached a conclusion on whether or what new obligations should be imposed on financial services professionals.”

Piwowar noted in comments to reporters on the sidelines of the recent Investor Advisory Committee meeting at SEC headquarters in Washington that he was not trying to “stop” a fiduciary rulemaking.

White also did not explain how she would clarify her position regarding a fiduciary rulemaking.

Ira Hammerman, SIFMA's executive vice president and general counsel, told ThinkAdvisor that SIFMA is "very eager to hear her [White's] views" on a fiduciary rulemaking. "I don’t think anyone has really heard them yet."

Skip Schweiss, president of TD Ameritrade Trust Co. and managing director of advisor advocacy and industry affairs at TD Ameritrade Institutional, surmised that White may "give a policy speech laying out her position" in an attempt "to try to move the Commission ahead."

Says Schweiss: "It doesn't appear [the commission is] close to this decision. ...Frankly, I have a hard time seeing [the SEC] deciding not to proceed with some kind of action on this front," as White "has said so many times in so many public forums that this is a very important issue to her."

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